Feds Take A Step Closer To Trying To Regulate Bitcoin

from the control-control-control dept

We're still somewhat skeptical about the longterm prospects for Bitcoin, even if it has shown the ability to rebound after its initial hypecycle crashed. However, we've always known that the government was uncomfortable with the concept of Bitcoin. From Senator Chuck Schumer insisting that it was money laundering to the FBI exploring the technology, you knew that sooner or later the government would try to do something.

Recently, they took a step in the direction of trying to gain some tiny bit of control over Bitcoin by having the Financial Crimes Enforcement Network (FinCEN) issue new guidelines concerning rules for (unnamed) "de-centralized virtual currency." Basically, the rules say that "money services businesses" including "money transmitters" will have to report "potentially suspicious transactions" to the government -- which potentially could involve a decent number of Bitcoin transactions. The question was who qualifies, and the new rules basically suggest if there's a connection to another currency (say... US dollars), then you've got an issue. Users of Bitcoin are clearly exempted, but with sellers... it's not so clear. As Tim Lee explains:

On the other hand, "a person that creates units of convertible virtual currency and sells those units to another person for real currency or its equivalent is engaged in transmission to another location and is a money transmitter," and is therefore subject to federal regulations.

However, this may only apply to those who perform money transmitting services "as a business." FinCEN says that "a user of virtual currency is not an MSB under FinCEN's regulations and therefore is not subject to MSB registration, reporting, and record keeping regulations." But with a peer-to-peer currency, the line between a "user" and an "administrator or exchanger" is not at all clear. The regulations define an exchanger as someone who "engaged as a business in the exchange of virtual currency for real currency."

Of course, with an unclear rule, you can bet that some people are going to test the boundaries -- and that could eventually lead to a very interesting case, challenging specific aspects of Bitcoin.

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Not to mention that it's going to be pretty difficult to stop 2 guys from sitting in front of a computer and one handing the other a suitcase full of $10,000 while the other sends 1000BTC to a random address.

Re: They need to get big fast

Legitimacy

A few months ago, 1 bitcoin was like $13. Now it's like $87. All this does is validate BC as a legitimate currency, and because of that...the whole thing has explored. A new hype/bubble? Perhaps. Time will tell.

Seems dicey if peope are paying real money for them

If people limit themselves to an economy only operating on Bitcoins, that seems like an interesting monetary experiment. But for people to actually exchange real money for them, seems like Bitcoins might as well be Beanie Babies. Maybe the government should stay out of it and let it collapse on its own.

Anonymity has always been a basis for constitutional law. Bitcoin violates nothing in the constitution except maybe a few of the 50 million poorly worded congressional filler pages sponsored by special interest groups. Compare that with the 50 or so pages of personal criticism about such ridiculousness posted here on TD... -feel suffocated- Which brings up monetary policy?

As inflation is imposed the value of cash diminishes (while commodities go up) what was once large sums 10k or a million bucks 100 years ago is nothing today in comparison. Other creeping laws of restrictive legislation chips away at the value and stability of personal property. Its like we don't even own our land, house or bank accounts anymore let alone spend (it) or move privately.

Its so bad that if your deposit $500 cash in a bank account and try to forget about it... (the best way to save!) it gets confiscated (various states with varying time lengths some as short as one year) by the state and a fee is charged to get it back. (if you remember it) It used to be a legend that a bank would call you up with a long lost deposit gaining compound interest but that is now impossible.

Have to be honest... don't care what the FED or US whines about and actually (yeah right anytime soon now. Hahaha) expect the courts to toss out about 49 million filler pages congress likes to pass so much. (figurative foot in congressional rear.) Have been tired of trying to sort out the doublespeak and statistical whatever long ago.

Since personal privacy has become an issue does it matter what money laundering charges have been levied by congress, white house, JDept or anyone? In reality it does very much but many times public sanity simply catches up. Since I don't believe in the validity or rational of the drug laws/war (another huge drain on economy/society) its an irrelevant subject. IMHO

Bitcoin is a fascinating development completely undefined by current law. Internationally based decentralized virtual spending accounts that does not use any currency at all? Some interesting questions as to how it is valued between each countries currency values without some base standard?

Since the stability of the rapidly inflationary adjusted dollar has long been in question it would be nice to find some island of value/transaction stability. Questions on how Bitcoin handles inflationary crisis need to be answered as these obvious economic traps need to be maneuvered around. What happens to forgotten accounts and family inheritance matters?

I am at a loss as to understand how the Feds are going to regulate Bitcoin.

Lets assume for the point of discussion that a Canadian transfers 10 Bitcoins to a Cuban for services in Cuba who then uses the Bitcoins to purchase Swiss franks which are deposited in his offshore account.

How does any of this concern the US government? That is what I do not get.

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That's where you're wrong, many companies are making the move to freely translate their in-game points back to money.

For a good example of this, look at Diablo 3, Think of how many people use the auction house to transfer those in-game items back to cash and how Blizzard is taking a cut of it. I imagine if the Feds were aware of this happening instead of being blissfully unaware of most things until they're at least four years old, they would be throwing a shitfit over that.

Re: Legitimacy

The Bitcoin has ALWAYS rapidly fluctuated in value, people were saying that it would never get higher than 40 dollars before the huge crash in 2010 (I think that was the year?). Then Bitcoin fell off the map for a few years because it was only worth a few dollars per coin. Now it's back up because people have been buying back into it. What will happen is another bulk-buyer will try to buy out and the whole thing will crash down once again.

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Sure bon appetit. In the meantime we get to look at scams like Bitfetch which charge up to $270 dollars for 1 TB of private torrented data. Scammers living off the fear of torrenters getting caught. Sick

Re: "real"

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The gold-standard was a long time ago.

The paper-notes in my pocket are only valuable by agreement with my fellow citizens i.e. the paper itself has limited intrinsic value.

This difference is even more pronounced with the 1s and 0s that represent my bank balance. Arguably a bit coin (which represents actual computation effort) has more intrinsic value than those 1s and 0s.

Governments want to crack down on bitcoin or anything that gives power/equality to the people! They do not want to shut it down in fear of tax evasion. The majority of tax evasion is done by the rich, and they get away with it. The reason is they want to keep us as their slaves! Wake up people, stop paying taxes! If bitcoin is an option, then go for it. Stop being a slave!